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How does the NHL Entry Draft really work?

Not an expose on how the fix is in, just the boring facts about a thing we think we understand because it’s ubiquitous.

2021 NHL Draft - Round 2-7
The enemy at the virtual draft last year.
Photo by NHL Images/NHLI via Getty Images

The NHL draft comes every year, like Christmas, and like Christmas, most hockey fans are concerned with what they’ll get, not how it gets there. The process is ignored, the meaning of it all goes unexamined a lot of the time, except for the occasional article that compares the draft to a tribal ritual or demands it be abolished. In my experience we often know the least about the ubiquitous things in the NHL, so this is a dive into the entire process of the draft. We all might learn something. New fans certainly will.

The NHL draft rules are contained in different places. The Collective Bargaining Agreement (CBA) between the NHL and the NHL Players’ Association (NHLPA) outlines some of the specifics in Article 8. The NHL itself produces some other regulations as Hockey Operations Guidelines and the NHL transfer agreements with various international hockey associations and the Canadian Hockey League (CHL - made up of the OHL, WHL and QMJHL) contain some more draft-related rules.

The Draft Itself

The draft is held at a time specified in the CBA to be in June, and otherwise decided by the Commissioner. As we know, the draft hasn’t been held in the expected way or at the normal time since 2019, so to move the draft to a different month over the last three years, the NHL and the NHLPA had to negotiate an agreement to amend either the CBA or the Memo of Understanding (MOU) that extends the 2013 CBA into the future. This year, the draft is July 7-8, with the expectation that it will revert to its expected timeline next year.

The draft is seven rounds, and with 32 teams this year, there will be at least 224 players drafted. The first round is on Thursday evening, the subsequent rounds are on Friday. The Thursday night portion is the big show with the first overall and the 31 players who follow getting a longer time on stage for photos and congratulations. The players expected to be drafted in the first round are all on hand, usually backstage. On the Friday, the draftees come down out of the arena (this year it’s the Centre Bell in Montréal) which will be full of hopeful players and their families as well as fans ready to boo the Leafs picks.

Teams come to the draft with their GMs, assistants, scouting directors, cap specialists and whoever they think they need to keep up with the job. They also come with a lot of phones, and stash an entire staff in a hotel room or back at the team offices. The reason for all that hullabaloo is two-fold — they don’t know who they’re drafting for sure until their turn comes, and a lot of trades happen on the draft floor.

The NHL sends what amounts to a mobile league office to the draft, and they can approve trades or contracts in person so that players, picks or signing rights can move rapidly. It’s very likely that the big blockbuster deals involving players really get negotiated before the draft, or on the Thursday night/Friday morning before the second day’s action, but they are often announced during the show when Gary Bettman steps up and says, “We have a trade...”

The draft is a show. It’s hard to remember that after two years of Zoom-based drafting that was interminably slow, boring and tedious. In front of the fans of the team with the first-overall pick and a boatload of later picks too, it will be a loud and fun atmosphere this year.

The order of the draft is determined according to rules that the NHL largely controls themselves. The CBA provides a bare framework of how the order can and cannot be determined, but otherwise the league gets to decide and then they tell the NHLPA how it will be. This makes sense because until the draft happens, the players involved are not the PA’s problem. In fact, no one really speaks for the draft prospects as a group beyond their player agents.

The current order of the draft is determined by three things: the lottery, the regular season standings and the playoffs results. Wikipedia laid this out in an easy to grasp fashion so here it is (by previous season, they mean the one that just ended, and usually isn’t technically over until a few days after the draft):

  1. The teams that did not qualify for the playoffs the previous season (picks 1–16)
  2. The teams that made the playoffs in the previous season but did not win either their division in the regular season or play in the Conference Finals (picks 17–24 up to 28)
  3. The teams that won their divisions in the previous season but did not play in the Conference Finals (potentially picks 25–28)
  4. The teams that lose in Conference Finals (picks 29 and 30)
  5. The team that was the runner-up in the Stanley Cup Finals (pick 31)
  6. The team that won the Stanley Cup in the previous season (pick 32)

CapFriendly’s draft order page shows you how it all shook out this year, and also includes all the traded picks.

Because the NHL controls the order process directly, they can and do tinker with the lottery rules from year to year. This year’s included a cap on how many places a team could move up. These changes are usually reactions to actual results, not the base concept the lottery is built on, making the rule changes a part of the hallowed NHL tradition of reactive behaviour and a gross misunderstanding of probabilities.

The Draft Picks

Teams get one pick for each round every year. What they then do with them is up to them, and fairly large numbers of picks end up as parts of trades, sometimes trades just for other picks.

Trading up is the process of trading a set of draft picks or a pick and other assets for a better pick. In the 2021 draft, Detroit traded three picks, including the 23rd overall that year to acquire the 15th overall pick.

Trading down is the process of trading one pick for multiple picks of a lower quality, or what Dallas did as the partner in the trade mentioned above.

There is much debate over the wisdom of these trades, and it depends on team needs and number of picks on hand. Generally trading up is considered a poor choice unless the team doing it genuinely believes the player they are trading up to select has a higher than expected probability of success, or they are trading into the top half of the first round, as Detroit did in this example.

Detroit took a goalie, a common goal of teams who trade up. There are dramatically fewer goalies in the draft than skaters, so most draft truisms fly out the window with goalie prospects.

There is one other source of draft picks, and those are compensatory picks. The process for awarding a compensatory pick is outlined in the CBA, and it happens occasionally. There used to be picks forcibly traded in compensation for the signing of GMs or coaches under contract with another team, but that no longer exists, and was never part of the compensatory process. Draft picks given in compensation for offer sheets are also not compensatory picks. Compensatory picks are extra picks that are awarded in the following circumstances:

In the event a Club loses its draft rights to an Unsigned Draft Choice drafted in the first round of the Entry Draft (except as a result of failing to tender a required Bona Fide Offer (as defined below)), who

(i) is again eligible for the Entry Draft,

(ii) becomes an Unrestricted Free Agent, or

(iii) dies,

a Compensatory Draft Selection shall automatically be granted to that Club, which Compensatory Draft Selection shall be the same numerical choice in the second round in the Entry Draft immediately following the date the Club loses such rights. By way of example, if a Club cannot sign the third pick in the first round, it will receive the third pick in the second round as compensation.

This year, one compensatory pick has been added making the draft total 225 players:

Teams are “on the clock” at the draft and have a limited time to make their selection. In all the chaos, trading and hours spent, all the picks get made, but if a team fails to make one, that draft pick is gone forever. There’s no compensation for that kind of miss.

There is one famous example of a team that skipped the entire draft, though. In 1983, the St. Louis Blues were in the middle of an ownership debacle, and the team sent no one to the draft and made no picks.

The Draft-Eligible Players

The really complicated part of the NHL Entry Draft, the aspect that employs a lot of people and is a fulltime year-round job, is the one that we actually never talk about much. The players just appear on the day and are divvied up. Draft lists proliferate ranking the prospects, and they all have the same names on them, just in different orders. The real job that identifies all those players is actually the work of NHL Central Scouting (NHLCS).

The NHL itself, the league, not the teams, decides who is a likely draft prospect. The teams and the fandom that exist around them, just choose from the NHL’s list. There are some independent draft analysts and prospect fans who start tracking players well before they are 18 and on the NHLCS public lists, but most of that work ends up aligning with the NHLCS’s own lists which rule on draft day. This isn’t universally true, of course. Sometimes players NHLCS has left off their lists get taken, but it’s hard to imagine anyone in the first three rounds getting drafted who is not on their lists.

NHLCS produces four lists: North American goalies, North American skaters, European goalies, European skaters. The consolidated ranking lists produced by media outlets and fans are the only lists that attempt to merge those ranking together. North American refers to players who play in Canada or the USA in the season prior to the draft, not nationality. The same goes for the European lists. Auston Matthews topped the European skaters list back in 2016. These lists appear in the winter in an interim form and then are finalized in the spring.

While the media and amateur lists are often informed by scouting, statistical analysis or other means of measuring players against each other, the NHL Central Scouting lists, products of a full time department of scouts and analysts, are the source material for everyone. That’s an interesting point to consider when you look at the relative success rates of drafted and undrafted players.

Draft Pick Value Analysis

Analysis of draft picks has been part of the analytics of hockey for decades now. One of the early attempts to quantify the value of the two sides in a pick trade was at the SBNation blog Broadstreet Hockey, and was a by the mysterious Eric T.

I find this method fairly easy for a layperson to grasp, and if you think it’s smart, you should really pay attention to what the Hurricanes do at the draft. Kyle Dubas follows this kind of thinking as well.

That post links to a whole host of others from the early days of SBNation blogs when original research was fairly common. The bottom line on those efforts has been tweaking the finer details of a thing that’s broadly represented by all the research: the top section of the first round produces NHL players of note, and the rest of the draft barely produces any NHL players at all.

I like a simpler method. There are 225 players in the draft this summer. The number of players who become regular roster NHLers for the first time in any given year is less than one per team. The number of young players in the first or second year of an Entry Level Contract who become permanent NHLers is usually around 10 or less in a given year.

The most recent look at draft pick value I’m aware of took a new approach, wiggled the lines around a bit, and landed up with something very little different to what’s been in use since Mr. Tulsky was a blogger.

The other very interesting phenomenon is that skaters, particularly forwards, are more accurately selected than anyone else. Questions have to be raised about the value of NHLCS and scouting as a profession if the players you can likely guess at with points are the ones they get right. The differences between success rates for drafting forwards and defenders also makes the average pick valuation process a little too blunt an instrument, too.

There’s another way to look at this, which preserves the round by round binning of the picks that is so inevitable a bias that it’s easy to assume it’s shared by most GMs. A first-rounder is different to a second-rounder in everyone’s mind, except of course they aren’t at all, and one of the first-rounders is the pick taken right before one of the seconds. There’s a night in a hotel room in between, of course.

Here’s a delightful pie chart from Quant Hockey that shows the draft success from the perspective of the successful, not the entire draft class:

2021-2022 NHL players by draft round

The big beige blob of undrafted players is 16% of the 2021-2022 class of NHLers or 182 players, seven fewer than the Round 2 number. This is approximately the same proportion that will appear every year.

In other words, NHLSC’s lists are wrong on a significant number of players every year. A lot of future NHLers are either not on their lists at all or are so far down them, they don’t get drafted. If you measure the validity of any draft list by how its ranking correspond to the order players are taken, you’ve calculated something other than success. You’ve measured conformity. It’s a truism that Bob McKenzie’s list corresponds to the actual draft the closest.

An evaluation of the success of the draft picks a given team or GM makes takes years and no one to my knowledge has ever publicly done that kind of work to evaluate executives. We don’t actually know what an average draft record of success is, what’s better than average and who has been very bad. We also don’t know at all what the expected distribution should be for a pick. That is: what range of outcomes is a success and what isn’t. The sample number of results per team in a given year is around a dozen or less, numbers small enough to have results swamped by random events like injuries.

Many people intellectualize the draft like a lottery with a binary result of win (usually defined in a vague way as “NHL player of value”) or lose. This is the unsatisfying method used to define pick value in nearly all models. Using this method erases the close, but not quite results and makes it impossible to tell the smart drafting from the lucky drafting — if that is even possible to know.

We are left to guess about everything related to the draft: who should be picked in what order, and who is missing from the draft entirely. The formality of the process, the show-biz presentation and the months of speculation hide this reality behind a lot of short declarative sentences that tell you exactly what the future prospects of a prospect are. No one really knows. All opinions can live together in disharmony because none can be disproved. It’s the ideal part of hockey fandom to argue about.